Thursday, February 21, 2019

Momentum Continues to Build for NE Offshore Wind

By Michael Kuser

BOSTON — The offshore wind industry is poised for a wave of growth in the Northeast with expanding solicitations, falling contract prices and increasingly competitive auctions for new project sites, Massachusetts officials and wind developers shared Wednesday.

The Environmental Business Council of New England held a conference on offshore wind development at the law office of Wilmer Hale in Boston on Jan. 23. | © RTO Insider

“We’re seeing more action in the industry, and we’re seeing more projects being developed in the multiple lease areas that we have,” Massachusetts Energy and Environmental Affairs Secretary Matthew Beaton said at a meeting of the Environmental Business Council of New England.

Matthew Beaton | © RTO Insider

Beaton said he was excited to see New York expand its offshore wind target to 9,000 MW and joked that his state would now have to go for 50,000 MW. (See New York Boosts Zero-carbon, Renewable Goals.)

The state does want to solicit an additional 1,600 MW of offshore wind energy, and “we will be doing our additional procurement [800 MW] at least by June, and could be sooner,” Beaton said. (See Mass. Looks to Double Down on OSW, Clean Goals.)

The partial federal government shutdown forced James Bennett, chief of renewable energy at the U.S. Bureau of Ocean Energy Management, to cancel his speech about federal oversight of offshore wind leasing and regulation, said meeting chair Michael Ernst, executive adviser at energy consultancy Power Advisory.

Michael Ernst | © RTO Insider

However, Ernst showed slides of lease areas off the East Coast held by different developers and highlighted the December auction by BOEM that brought in $405 million for three wind energy sites off the Massachusetts coast — about six times the revenue from all previous auctions combined. (See Mass. Offshore Lease Auction Nets Record $405 Million.)

“We’re reaching the crest of that giant Hawaiian wave and heading for shore,” Ernst said.

Jobs, Tx and Wildlife

The Massachusetts Clean Energy Center will next month announce its first workforce solicitation awards for several training programs, said Bruce Carlisle, the center’s senior director for offshore wind.

The state estimates that deploying 1,600 MW of offshore wind will create up to 317 jobs during construction and indirectly support up to 985 jobs over the next 10 years.

Bruce Carlisle | © RTO Insider

The CEC also worked to “get the lay of the land in terms of where potential interconnection transmission landfall might be in order to inform state siting processes and what the basic grid was looking like,” Carlisle said. The center is “looking at where there were 345-kV high-voltage substations available for tie-in … stepping up from increments of 500 MW and looking at upgrades and what estimates of cost might be.”

Asked about expanding the target, Carlisle said authorization for an additional 1,600 MW requires the state’s Department of Energy Resources to look at the benefits and tradeoffs. Eric Steltzer, deputy director of DOER’s renewables division, noted his agency was aware that the offshore wind report had a legislative deadline of July, and also that Gov. Charlie Baker had made a pledge during the recent election campaign for it to be published in May.

Rachel Pachter, vice president of permitting affairs for Vineyard Wind, announced the company’s agreement with the Conservation Law Foundation, National Wildlife Federation and Natural Resources Defense Council to protect the right whales off Nantucket and Martha’s Vineyard.

Rachel Pachter | © RTO Insider

A partnership between Avangrid Renewables and Copenhagen Infrastructure Partners, Vineyard last May won the contract to supply Massachusetts with 800 MW of offshore wind energy. (See Mass., R.I. Pick 1,200 MW in Offshore Wind Bids.)

“I personally spend about 50% of my time on fisheries issues,” Pachter said.

The company will base its operations in the Port of New Bedford but is looking at other ports as well.

“We’ve been working very hard to do our operations and maintenance on Martha’s Vineyard, particularly in Vineyard Haven, as … year-round jobs are a big thing for folks on the Vineyard,” she said.

“Stakeholder engagement is very important,” said Matthew Morrissey, head of New England markets for Deepwater Wind, which was acquired by Ørsted US Offshore Wind last year. “As it relates to commercial fishing, I am a fifth-generation New Bedford resident, and I represented the commercial fishing industry for a long time … which has legitimate concerns.

Matthew Morrissey | © RTO Insider

Morrissey said some of this engagement, however, is becoming taxing for the fishermen: “They just can’t show up,” so several different organizations have emerged to represent them. He cited the Responsible Offshore Development Alliance having “emerged as a true representative of many constituencies.”

Vineyard in October signed an agreement with the town of Barnstable to bring its power onshore there, and in November it signed an agreement with MHI Vestas for 9.5-MW turbines, “which was the largest commercially available turbine last time I checked a week ago,” Pachter said.

Ruth Perry, marine science and regulatory policy specialist for Shell Exploration and Production, said subsidiary Mayflower Wind is looking to set up a joint venture office with EDP Renewables.

Competitive Pricing

The hot competition for offshore wind contracts has “led to strikingly low prices in the first rounds,” Morrissey said.

Ruth Perry | © RTO Insider

Vineyard’s 800-MW contract with Massachusetts runs 20 years and has two 400-MW tranches. The first tranche starts at $74/MWh and the second at $65/MWh, with the prices increasing by 2.5% per year. Partially redacted contract summaries from the state’s Department of Public Utilities show an average nominal price of $64.97/MWh in 2017 dollars.

“Those low prices will further embolden state leaders along the Atlantic seaboard to push forward on increasing levels of commitment and as a result it will be a cyclical dynamic,” Morrissey said.

The combination of Deepwater Wind and Ørsted has a substantial footprint in the wind energy lease areas, he said, pointing out the “extremely exciting” wind targets in the region.

“We anticipate Connecticut coming forward in this legislative session with 2,000 MW or thereabouts,” Morrissey said. The company also expects Virginia to raise its target to 3,200 MW, which follows New Jersey’s 3,500 MW and New York’s new commitment to 9,000 MW.

“We’re seeing now the confidence in the industry build as a result of these procurements,” he said. “The challenges of today are nothing compared to the challenges five years ago when there was no marketplace.”

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